Here is a great blog post, entitled "Barbie Does Economics", about the recent paper by Kartik Athreya “Economics is Hard. Don’t let Bloggers Tell You Otherwise ”.

Ralph Vince comments:

Thanks for sharing this– what a fantastic blog, resonating with thoughts about the very kinds of things which have been sticking in my craw and gaping maw all weekend long.

I must admit too, any study into the Quantitative Finance world for me, has been sheer disappointment. I spent months studying many elements of this, stochastic calculus etc. All of it is fascinating to me from an academic standpoint– but, from a practical one, it just doesn't cut it. I've been around this a long time– long enough to know what works and what doesn't. Most importantly, from the time I could utter my first words, I's been steeped in the world of gambling, gamblers, traders and risk takers. I know the characters and their motives. One of the most distinguishing– and damning, for them, aspects…they don't.

Montier goes on…."The idea that what we need is more ‘worker bees’ gaining their PhD’s from conducting ‘angels on a pin head’ like work based on minor alterations to previous research makes me want to cry. Where were the warnings from the orthodox economics establishment ahead of the global financial crisis? Oh, that’s right there weren’t any.

Indeed many of those who warned of the problems ahead did so because they weren’t constrained by the kind of training that an economics PhD suffers. "

Marlowe Cassetti writes:

I recently read Montier's book The Little Book of Behavioural Investing and I found it very helpful in understanding the shortcomings of our mental processes and our actions as applied to the investing/trading. His book validates Pogo's declaration … "We have met the enemy and he is us"

Stefan Jovanovich writes:

The largest single bubble in the world right now is the education game– not because the world does not need more and more of it but because the mechanisms for providing knowledge have become a Ponzi scheme in which too many students in higher education are only learning how to become teachers. There simply are not, and never will be, enough teaching jobs to go round. It is quite literally a pyramid party.

Ralph Vince responds:

Stefan, you REALLY have my gears turning today as they haven't turned like this in a while. I agree on the bubble of the "education" game.

There are two ways you can learn something in life. Either you hear it, or, you live it. Hopefully, when you "live it," when you have direct experience, you learn from it — but not always. In fact, maybe not even the majority of the time.

The Old Frenchman used to say to me, "The only way people learn anything is by pain."

That may be true, and if not, it's likely pretty close. I suppose the definition of a "windfall" is to learn something by hearing it, being able to accept it, and not have to experience the pain firsthand as a means of learning something. I don;t know if it "sticks" well enough though if we merely hear it, and don't walk away with a bit of sting from it.


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